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$100,000 Virtual Portfolio – The Watch List

Something went wrong with the last post and I can no longer edit it so forgive the typos.  We'll pick up where we left of and it's not a bad idea to keep a watch list anyway in a separate post so we can keep adding trade ideas in the comment section.  Of course these plays aren't just for the $100KP – just because you like taking more risk than our conservative portflio doesn't mean there's no room for a few "safer" plays, especially when they are designed to put cash in your pocket….

 

We had our watch list from Aug 23rd, and we did miss a few chances so this week I’m going to put up some wishful entries that we’ll be looking for.  For example, We’d like to buy GE $13 (now $13.87), selling Oct $13 puts and calls for $1.80 nets $11.20/12.10.  Now, I don’t care if GE is $1 or $100 nor do I care what the Oct puts and calls sell for, what I want is the combination of GE stock and the sale of the Oct $13 puts and calls that equals $11.20.  Right now that combo totals $12.05 so there is no way at the moment but on Tuesday, that was the price as we dipped to so the idea is to simply be prepared to pull the trigger next time.

To be clear, it’s the NET we focus on and if you can put in an offer at that price, great.  Otherwise we just watch for an opportunity to buy something we want when it’s on sale.  Since we have a $100K virtual portfolio and we don’t want to commit more than 10% to any position, we generally want to keep our entries on a first round at around net $2,500 so for GE above, we’d buy 200 shares.  Here’s some other trades of interest:

HRB tends to have a poor fall so we patiently wait fo a chance to sell 5 Oct $15 puts for $1+, currently .25. 

MHP held $28.50 on a big volume drop.  If we can sell 5 Oct $25 puts for .70 (Thursday’s high) that’s a nice entry ($24.30 net). 

TASR got the sell-off we were hoping for and we can pick up 500 shares for $4.50 (now $4.60) but we have to go on faith and just sell 5 Oct $5 puts for .60 so net $3.90 on that spread is our goal.  When they get back to $5, we’ll look at selling the calls.

UNG has gotten so freakishly low it’s now worth a risk.  Keeping in mind that UNG can go back over $15 quickly if we have a hurricane but could also be wiped out if the ETF unwinds badly (doubtful) The 2011 $6 calls, now $4.20 can be paired with the 2011 $12 puts, now $4.60.  That’s spending $8.80 for a $6 spread so the risk is $2.80.  My plan is to offer $8.30 for the spread and then, if we get it, sell some puts and calls against it whenever UYG makes a big run one way or the other.  We only need to sell .30 per month to eliminate our premium.  2 contracts to start this play

IN PROGRESS

 


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  1. phil ; On MHP, I think you meant to say "sell Oct 25 P&C,didn’t you? If not,your net number can’t be acheived
    dflam


  2. phil:  never mind.too much party last night
    dflam


  3. MHP/Dflam – It’s not a buy/write, it’s a naked put sell.  In other words, if they dip again and we can sell the $25s for .70, which WOULD give us a net entry at $24.30 if put to us (almost 20% lower than now) then we don’t mind.  Otherwise, we make .70 on $12.50 in margin (5.6%), which is within our goal of 30% per 12 months.  Oh, now I see you next comment so nevermind but good to point out for others anyway…  


  4. Hi Phil, in $100kp BAC position I am short Sep 17 puts and calls, I notice in the review you are now sold Oct 17 on the call side.
    I sold Sep 17′s for $1.60 (now .64) looks like I missed opportunity to buy back at some point. Would you now recommend rolling this out to October please?


  5. Hi Phil,
    PLS correct me if I am wrong on TASR Buy 500 stock at 4.50 =2250.00 Aswell sell NAKED 5 puts a .60 =300 credit
    you out of cash 1950.00 If stock goes down further you loosing on both sides
    yodi


  6. Hi, Phil,
    I suggest, if I may, a very simple play, naked Oct 25 Puts on MAC. Used to be $1 on Aug 28 when I bought a load, now they’re 2.10, and still with a nice potential. MAC is one of these shop mall operators with negative cash flow, one must wonder how come it went up in the first place. I guess, just following the crowd of the rest of the REITS.
    So, I’m guessing, by mid Oct. (if not sooner) MAC stock will be btw 20-15/share, so this is one of my relatively long plays.
    Anybody’s comment is appreciated.
    Peter


  7. Phil, on UNG, you said "That’s spending $8.80 for a $6 spread so the risk is $2.80 through April."  Where does April come into play here?  The options expire in Jan 2011, correct?


  8. Hi guys, hope you’re ll having a nice weekend!

    BAC/Steve – No big deal, we simply never filled the Septs at the price so we flipped to Oct as .64 wasn’t doing it for us by then.  Pretty much at this point you want to stop them out by .80 and otherwise let them die unless BAC really starts falling. 

    TASR/Yodi – Yes, hence the faith thing,  You can do one or the other to be more conservative but, as you may know, TASR is a stock I WANT to retire on so I’m not shy about buying more. 

    MAC/Pdaskaloff – I like MAC but they have a scary debt/cash ratio of 50:1 so I wouldn’t touch them long under any circumstances.  The short play does look attractive and you limit your loss with the put if they do squeeze people up (25% of the shares are held short as of 8/11).    So I like the idea of being short on them but we have been so crushed going short on CRE that I can’t get enthusiastic about it.

    UNG/Cwan – Oops.  I had originally written it up as an April spread and then decided it was worth the extra money to move out to 2011 but I forgot to change that statement.  Good catch!


  9. If you are new to TOS and want to see where HRB would be projected to be to sell a put for $1.00 on 9/8/09, then go to the Analyze tab, enter HRB for the symbol, select the Oct options.  Between the Sep options and the ‘options’ expander, notice there are some additional input fields.  While watching the ‘Theoretical Price’ column on the puts row (you may have to modify the ‘layout’ on this screen to add the ‘theoritical price’ colume) for the Oct 09 $15 strike, decrease the ’stock price adjust’ to about -2.05. This should show a price of about $1.00 for the put at a stock price of today’s (9/7/09) $16.62 – 2.05 (adjust) to leave you with a projected price of $14.57 for the stock when the put would reach $1.00.  Notice because of theta this will change every day, so to see what it would be on 9/10/09, change the ‘Date’ value to 9/10/09, then adjust the stock price to about -$2.07 to get the $1.00 put price.  This is easier to me then making my own calculations while keeping aware of the changing deltas as the price drops.


  10. PSQ/Phil – Hi, Phil, you don’t seem to like PSQ anymore.  I didn’t get into the PSQ play anyway.  Any recommendation on a "low-maintenance" protective play?